Starbucks' COO Alstead taking 'extended unpaid leave'

Reuters Staff

3 Min Read

People line up inside "Dumb Starbucks", a parody store of the Starbucks Coffee chain, in Los Angeles, California February 10, 2014. REUTERS/Jonathan Alcorn

LOS ANGELES (Reuters) - Starbucks Corp on Thursday said Chief Operating Officer Troy Alstead, who as finance chief helped lead the coffee chain’s extensive restructuring a few years ago, is taking an extended unpaid leave to spend more time with his family.

The announcement comes amid concerns on Wall Street that Starbucks later this month could report disappointing results from the holiday quarter, traditionally its biggest for sales.

In October, Starbucks said the early re-launch of its popular Pumpkin Spice Latte seasonal drink failed to heat up business at its U.S. cafes in the quarter that ended Sept. 28.

Last month, Starbucks announced it would add beer and wine, lunch and evening food selections and roll out mobile ordering in a bid to jolt U.S. traffic.

“My expectation is that the company will miss the (fiscal first) quarter, which will be the second quarter in a row, and Troy is taking the heat for that,” said Hedgeye Risk Management analyst Howard Penney, who is bearish on Starbucks.

Penney said traffic to Starbucks cafes has decelerated as the chain’s food menu has expanded. McDonald’s Corp, which has not posted growth in sales at established U.S. restaurants since October 2013, also is struggling with bloated menus, he said.

“I want to be clear that Troy’s decision to take his Coffee Break/Sabbatical and suggestions that his departure is somehow linked to his health or our financial performance last quarter are false, off-base and irresponsible,” CEO Howard Schultz wrote in a memo to employees that was seen by Reuters.

Alstead has been with Starbucks for 23 years, the company said, and his last day in his current role will be March 1.

“The next year is for my wife and children, to give them my dedicated time and attention,” Alstead said in an employee memo that was obtained by Reuters.

Starbucks spokesman Jim Olson said Alstead had planned to take a similar break in 2008 but delayed it at the urging of Chief Executive Howard Schultz, who asked the then-CFO to help turn around the company after the recession sent Starbucks business into a swoon.

Starbucks said Alstead and Schultz will detail transition plans on the company’s quarterly earnings call, scheduled for Jan. 22.

Shares in Starbucks were off 1.4 percent to $81.35 in extended trading.

Reporting by Lisa Baertlein in Los Angeles and Shivam Srivastava in Bengaluru; Editing by James Dalgleish, Gunna Dickson and Gopakumar Warrier